Topic: Pharmaceuticals and life sciences

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$40 billion in deals in one day: is “big pharma” getting bigger?

In a single day last week, $40 billion worth of deals were announced in the pharmaceutical industry.  The jaw-dropping, combined value of the announced mergers and acquisitions has turned heads, and has prompted analysts to question the impetus behind these deals.

The increased activity may come as a surprise to some, as recent changes by the Obama administration have been aimed at limiting inversions – a type of merger in which a company (often American) buys a foreign counterpart, and then moves abroad to lower its taxes.  These rules put an end to what would have been the largest inversion … Continue Reading

What can companies learn from PE sharks?

Divestment is one strategy that a corporation can use to unlock funds for future growth and create long‑term shareholder value. According to a recent E&Y study, a successful divestment must meet three criteria: (i) it must create a positive impact on the valuation multiple of the remaining company; (ii) it must generate a sale price above expectations; and (iii) it must close ahead of its timing expectations. Only 19% of the companies surveyed for the study met all three criteria. Considering that divestiture activities are likely to increase in 2016 (a more detailed discussion on 2016 divestiture outlook can … Continue Reading

Confronting the mid-market M&A valuation gap

Firmex and Mergermarket recently published a report entitled Mid-Market M&A: The Valuation Gap (the Report), which explores valuation challenges that buyers and sellers are facing in mid-market M&A.

According to Mergermarket data, the number and value of American and Canadian mid-market M&A deals (US$10m to $250m in value) slipped year-on-year, with the slump continuing into the beginning of 2016. The valuation gap between buyers and sellers may help to explain why mid-market M&A momentum has stalled, despite high buyside interest.

Some experts contend that the valuation gap is in part due to the prevailing expectations of sellers, which … Continue Reading

Medical marijuana M&A in Canada: update

In October 2015, companies engaged in the licensed production and sale of marijuana welcomed the victory of pro-decriminalization candidate Justin Trudeau. Exactly what the victory meant for the heavily regulated industry was unclear but several publicly traded companies enjoyed an immediate rise in stock prices as the potential size of the market expanded significantly.

In early 2014, this blog commented on the increase in market activity ahead of new medical marijuana regulations coming into force on April 1, 2014 and noted that, at that time, Health Canada estimated that sales in the industry could reach $1.3 billion by 2024. … Continue Reading

An overview of global M&A activity: 2015 into 2016

2015 was an extraordinary year for global M&A activity. Mergermarket recorded almost 17,000 transactions worth a remarkable US$4.3tn. This topped the previous record set in 2014 by over 30%. The race for top performing sector this year was very close. Energy Mining & Utilities won with US$630bn in deal value; however, the top performers were only separated by US$150bn. The other four sectors in order are: Pharma, Medical and Biotech, Consumer, Financial Services and Industrial Chemicals.

North America

Once again North American markets lead the way with almost 1/3 of global deals and nearly 50% of global deal value. The … Continue Reading

Year in review: deal drivers in the Americas in 2015

Mergermarket recently released its 2015 full-year edition of Deal Drivers Americas (the Review). This comprehensive review of M&A activity in the Americas confirmed that 2015 was a year of mega-deals. Transactions involving giants such as Pfizer, Time Warner Cable, and Kraft contributed to an increase of 30% in M&A value, reaching a total of US$4.28 trillion across North America. In the US alone, deal value rose 40% since 2014, hitting a record high of almost US$2 trillion.

The Review evaluated by sector and by region. Some of the sector highlights include:

  • Technology, media and telecom: Technology, media and telecom
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New Year’s resolution: buying & selling smart

2015 was a huge year for global M&A with deal activity reaching $4.2 trillion by the middle of December.  If 2016 continues at the same pace, be prepared for a big year of M&A activity. In order to be well equipped for the upcoming year, ask yourself the following two questions when contemplating an M&A transaction.

Where are the key market opportunities?

According to the publication released by Raconteur entitled M&A Outlook 2016, on a global scale, five sectors are “blazing a trail”: financial services, telecommunications, pharmaceuticals, computer manufacturing, and oil and gas.

  • Financial Services – Consolidation is the
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M&A trends for 2016

The last 18 months has seen a rebirth in M&A. For the first time since the 2008 financial crisis, deal activity has reached pre-recession levels. This has been fueled by low interest rates, high equity prices and capital availability.

CDI Global’s Managing director, Jeff Schmidt, has gone on the record stating that while it’s hard to make universal observations when business conditions vary drastically by region, it is noteworthy that in the middle market there is currently a low inventory of quality deals and that there are far more active buyers than sellers, so the expectations of sellers regarding deal … Continue Reading

A global overview of December 2015 M&A activity

According to Mergermarket’s December insider, November 2015 was a record setting month for M&A activity. By the end of the month, global M&A value reached US$3.9tn which surpassed the 2007 full year record by almost 6%. This record came on a drop in volume by 1,228 transactions which further cements 2015 as the year of the mega deal. The top sector was Pharma, Medical & Biotech (PMB) with 84 transactions representing US$201.3bn. The driver behind this sector was the record breaking US$183.7bn Pfizer Inc.’s bid for Allergan PLC. This represented over 90% of PMB’s total deal … Continue Reading

Life sciences M&A sees new heights in 2015

2015 continues to see record-setting activity in both the frequency and value of M&A deals involving pharmaceutical companies, and generally in the life-sciences sector. According to a report published by PricewaterhouseCoopers, the combined value of closed M&A deals in the life-sciences and pharmaceutical sector surpassed USD $320Bn in the first three quarters of 2015. Further, a recently announced inversion deal between two major players in the pharmaceutical space has been valued at USD $155Bn. If successful, this will be the largest inversion deal in any sector, and the largest M&A deal in the history of the life-sciences sector.

Against … Continue Reading

Thomson Reuters reports healthy global M&A through Q3 2015

Office Buildings SunsetIn its Global M&A Review, for the first nine months of 2015, Thomson Reuters reports healthy global M&A activity leading into the final quarter of fiscal 2015. The study reports increases in both deal value and deal volume across most jurisdictions and industry sectors.

Global increase in both deal volume and deal value

Thomson Reuters reports that global M&A has experienced its strongest first nine months since fiscal 2007. Year-to-date, global M&A topped US$3.2 trillion on just under 32,000 deals. Compared to the same nine month period in 2014, this represents a 32% increase in deal value and a … Continue Reading

M&A activity in the pharmaceutical sector is driving the commercialization of new drugs

The global pharmaceutical sector has been rocked by several significant mergers and acquisitions in 2015:

  1. Indian generics firm Sun Pharma purchased GSK’s Australian opiates operations, citing the development of analgesics as a key growth opportunity
  2. US-based AbbVie acquired Pharmacyclics, with a central motivation being the acquisition of the blockbuster cancer drug Imbruvica
  3. US giant Pfizer received approval for its $17 billion (USD) takeover of Hospira from the latter company’s shareholders. Pfizer’s portfolio of sterile injectables and biosimilars will be significantly enhanced upon completion of the deal
  4. Irish-American generics firm Endo International purchased Par Pharmaceutical, citing Par’s diverse
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M&A in Canada: industry revenue and profits

Expanding growth in nearly all sectors

Norton Rose Fulbright focuses its services on 6 key industry sectors and, according to a study released recently by the Globe and Mail on Canadian corporations, almost all of these sectors have seen an expansion in revenue and most have seen growth in profits during the period from 2011 to 2015. While such expansion does not on its own drive M&A activity, it is important factor for identifying trends. Industries with the greatest growth may see increased M&A activity in the future; likewise industries with prolonged under-performance may be primed for consolidation.

Banking

1

The … Continue Reading

Cross-border and private equity activity in Q2 2015

As we move towards the end of the second quarter of 2015, many have wondered whether this year will be able to live up to the bumper year of 2014 in terms of cross-border private equity activity. Despite volatile commodity prices and an unsteady European market, a recent survey conducted by integrated communications firm RR Donnelley revealed that most private equity executives believe cross-border private equity activity will increase over the next 12 months.

In regards to industry drivers, the executives polled expect to see significant cross-border private equity activity in the energy mining & utilities sector, as a result … Continue Reading

2015 is the year of technology M&A

In recent years past, global technology M&A experienced slow first quarters. But not this year – the first quarter of 2015 set new post-dotcom-bubble records for quarterly value and volume according to EY’s report on Global technology M&A. Overall, there were 981 technology deals with an aggregate value of US $77.1 billion – a higher value than any quarter since Y2K.

The driving force behind the technology M&A boom

A main contributor to the “Year of Technology M&A” is the fact that corporate technology buyers are back in business after taking break during the fourth quarter of 2014. This … Continue Reading

M&A in Q1 2015: the results are in

The Mergermarket Group has published its Monthly M&A Insider – April 2015 report outlining trends and developments in M&A activity worldwide for the first quarter of 2015.

In North America, M&A activity continued on the upward trend set in 2014. The first quarter saw 1,116 deals valued at US $338.8 billion, which was a 11% increase compared to the first quarter of 2014. This increase was in no small part driven by the Heinz/Kraft deal, valued at $54.4 billion. The Pharmaceutical, Medical and Biotech industry was also a significant driver in the first quarter of 2015, which saw 122 deals … Continue Reading

M&A growth predictions for 2015

Forbes contributor, Michael Schwerdtfeger, recently commented that “2014’s dynamic merger & acquisition market is galloping right into 2015.” Citing various sources, he notes that 2014 was the strongest year for deal-making since at least 2008, with a 47% increase over last year. The overall value of deals in North America grew by nearly 55% due to a number of market factors, including large cash stockpiles, cheap financing, and a trend for large corporations to focus on external growth as opposed to increasing revenue with current business divisions. Schwerdtfeger highlights the three industries that saw the greatest growth: telecommunications and media, … Continue Reading

Sophisticated hackers may be trading with stolen M&A data

A recent report by security consulting firm FireEye reveals that a hacker group, referred to as FIN4, have infiltrated over 100 publicly traded companies and advisory firms since at least mid-2013 and are likely trading using inside information. FIN4’s ongoing hacking efforts particularly target the email accounts of individuals with access to non-public information about imminent M&A deals and other market catalysts. According to the report and an interview with Jen Weedon, FireEye’s manager of threat intelligence, the highly tailored tactics and level of sophistication suggest that the hackers may be individuals with experience on Wall Street.

Focus on

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Looking back on 2014: regional trends in global M&A

A look back on deal activity in 2014 undertaken by Mergermarket in its December 2014 Monthly M&A Insider reveals that North America dominated global deal value last year, hosting 48.1% of the value. Europe was next, with 27.3% of global deal value, but surpassed North America, dominating the global M&A scene in terms of deal volume.

In terms of industry sectors, Energy, Mining & Utilities led the pack with one-fifth of global deal value. The Pharmaceutical, Medical & Biotechnology, Industrials & Chemicals, Consumer and Telecommunications sectors followed closely behind. Global deal volume data reveal that the Industrials & Chemicals sector … Continue Reading

Pharmaceutical M&A: strong performance expected to continue in 2015

In its December 2014 cover story, Financier Worldwide provides an overview of the factors in 2014 that provided, and will continue to provide, favorable conditions for the high value and volume of pharmaceutical mergers and acquisitions. In the first half of 2014 alone, there was a total value of $317.4 billion USD in M&A deals. Financier Worldwide identifies three reasons why the markets have been ripe for M&A: (1) pharmaceutical companies are making changes in the way they do business; (2) there is a rapidly-growing market and supporting industry in China; and (3) tax inversion regulations have been, at … Continue Reading

M&A: a leading growth strategy in 2015

The economic fundamentals that drive M&A are back at pre-crisis levels, states a new survey published by KPMG. The number of acquisitions that companies will undertake is expected to increase in 2015: 82% of respondents plan at least one acquisition and 10% anticipate 11 or more acquisitions next year.

Indeed, the survey suggests M&A is an attractive growth strategy for the upcoming year since financing conditions are favourable and organic growth prospects appear to be limited. Fundamental M&A drivers such as healthy credit markets, large cash reserves and steady job growth rates are aligning and ready to light up … Continue Reading

More and bigger: Global and North American M&A market update

The 2014 trend of high value deals continues, according to a recently released Mergermarket Monthly M&A Insider report on global M&A activity. Through the month of October, the aggregate value of deals worldwide for the year has surpassed the last year’s total. Volume, on the other hand, still has some way to go before matching 2013 totals.

Geographically speaking, Europe saw the highest volume of transactions year-to-date, by a very small margin over North America (35.5% of global volume vs. 35.4%, respectively), but European deal values were comparatively lower, with European deals accounting for 22.6% of global deal value, while … Continue Reading

The M&A revival and other recent developments

Mergermarket just released the half-year edition of its 2014 Deal Drivers Americas (DDA) report, and it looks like a year full of clear skies and sunshine for the M&A market – in other words, the long-awaited revival is here.

Trends in private equity activity in the Americas

Looking at the DDA report, we see that North American deals in H1 2014 have seen a 26% rise in volume and an 88% rise in value over H1 2013. The numbers for H1 2014 are quite robust: 2,109 transactions with a  combined value of $749bn USD. The DDA report cites … Continue Reading

M&A activity continues to rise in Q2 2014

Recent reports by Mergermarket and Pricewaterhouse Coopers (PwC) have confirmed the positive forecasts for M&A transactions in Q2 2014.  Globally, deal volume has reached its highest level since 2007.  North America, in particular, has seen a strong amount of activity with a number of megadeals listed in the top 10 deals in the world.

North American M&A Review

Mergermarket recently published its Monthly M&A Analysis Insider detailing the robust increase in deal value in Q2 2014.  In North America, there was a 40.6% increase over Q1 2014 in M&A value.  In total, there were 1,291 transactions worth US$430.1 … Continue Reading

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